Points and miles are the budget traveler’s bread and butter. On average, a roundtrip domestic flight in the U.S. costs $381.53. This makes using points to purchase a flight seem like a no-brainer.
But not all flight redemptions are created equal. Sometimes, it’s actually better/cheaper to purchase a flight with cash instead of points.
Let’s examine 10 scenarios and see when you’re better off purchasing that flight with points vs. cash.
1. What is the Cash Value of Your Points?
Figuring out how much your points should be worth is an essential first step in deciding whether a redemption is worthwhile. To calculate cash value, look at a mock booking and compare the cash price to the point cost.
For instance, on this mock booking from DFW to MCO, tickets start at $202 for economy and $1266 for first class.
The same itinerary has a miles cost of 20,500 for economy and 126,500 for first class.
When you divide the cash cost by the mile cost, you get $0.99 cents/mile for economy ($202/20,500) or 1.00 cents/mile for first class ($1266/126,500). But, one itinerary won’t get you a good valuation answer.
The below roundtrip flight departs on the same day but has a much better point valuation of 1.28 cents/mile economy ($263/20,500) and 2.04 cents/mile for first class ($1112/54,500).
If you want to get a quick ballpark point value without all the research, check out the TPG point valuation guide, which is updated monthly.
Once you have an idea of what a good value of your points should be, you can use this information to decide whether your flight's point/mile cost is worth it.
2. When to Use Points Instead of Cash
Do you have a pool of airline points gathering dust? Are you wondering if now is a good time to redeem them for a flight? Let’s take a look at 5 situations where using points or miles is your best bet.
1. Great Point Valuation
If the flight redemption you are looking at has a good value, then now might be a great time to book with points. While value differs from airline program to airline program, a good value is generally anything over 1 cent a mile.
For instance, let's say you’re looking to book a Southwest flight, where a good point value is generally 1.3 cents per point. Well, if the flight you are looking at costs 12,500 points or $200, that gives you a value of 1.6 cents per point. By booking the flight above, you get 23% more value for your points.
2. Flexible Travel Dates
Are you ready for a vacation but don’t have a hard-set travel date? If so, congrats. This gives you a lot of flexibility to shop around, which can help you find great point deals.
Flying during the off-season, to a less-popular location, or flying midweek can all help you save significantly. Just keep in mind a cheaper cash price doesn’t always mean a cheaper point price, so double-check that point value before you book.
3. Short on Cash
Using points allows you to travel cheaply, and sometimes, saving money is all that matters. Perhaps you need a quick getaway or suddenly need to fly across the country to see an ailing family member but are strapped for cash.
While it can be discouraging to know you’re not getting the best point value, booking with points is still well worth it when you need to travel and don’t have the cash.
4. International & Upgraded Flights
International flights are often more costly than domestic flights. The average cost of an international flight is $1,217 for economy class and $6,972 for business class.
In looking at United, this sample roundtrip flight from EWR to LHR, costs over $3k for a business class seat, but only 215,000 miles.
With business/first class tickets on domestic flights often exceeding 50,000 for each leg, the above international flight is well worth the point cost with a decent 1.43 cents/mile valuation.
5. Flexible Cancellation
One of the biggest benefits of booking a flight with points is the favorable cancellation policy. Most airlines let you cancel or change a point booking at any time.
Cash bookings, on the other hand, often have change fees of $50 or more. If you cancel the same day, you can expect to pay even more.
Let’s use United Airlines as an example. If you book with cash, changing your flight is limited to a 24-hour departure window (24 hours between original and new departure). And for cancellation, you’ll only get partial credit if you booked economy basic.
However, if you book with points, you can cancel your flight at any time without penalty.
Other Point Ideas
The five situations above are just a few of the reasons why it might be better to spend points instead of cash. Here are a few other scenarios.
- Point expiration – better to spend them rather than lose them
- Price drop protection – if you find a better deal, cancel and rebook penalty-free
- Point discount flights – i.e., United Savers award
- Point sales – temporary discounts on select routes/dates
- Transfer bonus – i.e., Marriott gives an extra 5,000 points for every 60,000 you transfer
When to Use Cash Instead of Points or Miles
Earning points/miles is awesome. I mean, who doesn’t like to travel for free? But just because you have the points doesn’t mean now is the wisest time to use them. Let’s take a look at 7 scenarios where it makes more sense to pay with cash instead of points or miles.
1. Cheap Cash Price
Not all reward bookings are created equal. Have you ever seen a cheap flight that costs an insane number of points? This is where paying in cash is the better move.
Let’s say a good value for your points is normally 1.2 cents a mile. And the flight you are looking at costs $99 or 10,000 points. This leaves you a value of just under 1 cent a mile.
You’d lose out on $21 worth of value by booking the above flight with points. Booking with cash is the smarter move here.
2. Big Travel Plans
Are you saving up your points for the vacation of your dreams? Have your heart set on a business-class upgrade for your next international flight?
If you have a point balance goal set for a future trip, you’ll want to carefully consider any other bookings that could deplete your points. Ask yourself if booking a flight now with points is worth potentially postponing or downgrading your future travel. If the answer is no, then you should probably pay with cash, not points.
3. Earning Status
Airline loyalty status comes with all kinds of perks, from priority boarding and free onboard amenities to lounge access and expedited security checks.
For many airline programs, you can only earn status through paid tickets. This means point/mile bookings often don’t count towards earning status.
If you’re close to the next status tier or are approaching the cutoff period (i.e., end of the year), booking your flight in cash and earning those valuable status points will be the better choice.
4. Companion Passes, Certificates, and Discounts
Many airlines offer special companion ticket rewards for credit card holders. These can vary from one-time discounts to a full year of companion savings. But the one thing they all have in common is that you have to pay for your ticket in order to get your companion to fly free/cheaply.
Here’s a quick list of airlines offering companion promos
- Southwest – companion pass (12+ months)
- American Airlines – $99 companion ticket
- Delta – companion certificate
- Hawaiian Airlines – companion discount
- Alaskan Airlines – $99 companion ticket
- Lufthansa – companion certificate
5. Losing Out on Points and Cashback
When comparing point deals to cash prices, it's important to factor in lost points and cashback, especially when temporary promos are available.
For instance, a credit card might offer a one-time cashback bonus of $25 when you spend $100 or more on a United flight. Or, an airline program may offer a double-point promo on short-haul domestic flights.
The points or cashback you earn now could make your next redemption even sweeter.
Other Cash Ideas
Additional scenarios where spending cash might be better than purchasing with points include
- Cheaper flights elsewhere – bookings directly through travel websites, discount airlines, etc.
- Hotel points – hotel points often have a better value for hotel booking
- Better use for your points – you can also use points to book cruises, car rentals, resorts, and more.
- Upgrading flight – you can find point savings by booking a base fare and upgrading with points
- Pay off purchases with points – cards like Strata Premier let you pay for travel purchases, earn points (and status), and then pay off purchases with points.
Final Thoughts
I love traveling as cheaply as possible. The more money I save on flights, hotels, etc., the more money I have to spend on other things, including future travel. That said, it takes a while to build up a decent bank of points/miles, so I want to get the best bang for my buck.
Booking with points/miles will always save you money. How much it saves and whether or not the savings are worth it is up to you.
